entremet
Member
More than fifty years later, rents remained frozen at 1940 levels. It wasnt until 1999 that the Act was modified slightly to lift controls on some new construction and to allow rent increases of 4% per year. After a fifty two year freeze, however, a 4% increase was a pittance. Thus, even today there are thousands of flats where tenants are paying rents of 400-500 rupees a month (thats $6 to $8 a month!)far, far below market rates.
The rent control law meant that there was virtually no construction of rental housing (WP) for decades and a slowly dilapidating housing stock. (Ironically, the only free market in rental housing is in the slums)
Rent controls in Mumbai may have initially benefited tenants at the expense of landlords, but over time everyone suffers. Rent controls cause landlords to forgo maintenance and neglect their properties, and tenants not only live in dilapidated buildings but die when they collapse in heavy rains. Even if tenants are willing to either pay higher rents or to maintain the building, each tries to not pay his share of the expense (free riding), especially if appropriate retrofitting involves structural changes to the entire residential structure and not to individual apartments. Tenants also may lack the legal authority to make changes to their buildings structure.
http://marginalrevolution.com/marginalrevolution/2017/04/twisted-tale-rent-control-maximum-city.html
As a fan of the free enterprise system, rent control seems to thrown a wrench in that system that causing more problems that it intends to solve.
Terrible zoning laws and NIMBYism is the real reason why rents are out of control in the bigger metros, forcing prices down by force has terrible second order effects.